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Mortgage Rates Soar. Bernanke Comments Seen as Catalyst

Freddie Mac released its weekly update on national mortgage rates this morning, providing hard evidence of the sharp spike in mortgage rates reported widely last week.

Thirty-year fixed rate mortgages (FRM) leapt a big 53 basis points to land at 4.46%, their highest level since late July 2011, nearly two years ago. That's the largest weekly increase for the 30-year fixed rate in 26 years. Fifteen-year FRMs jumped 46 basis points to hit 3.5% in the most recent week, their highest level since August 2011.

One variable-rate mortgage skyrocketed similarly. 5/1 adjustable rate mortgages are up 29 basis points to land at 3.08%; one-year ARMs are up a more muted nine b.p. to 2.66%.

Freddie Mac Vice President and Chief Economist Frank Nothaft laid the rate increases directly at the feet of Fed Chairman Ben Bernanke, saying his "remarks on June 19th about the possible timing of reduced bond purchases" sent both Treasury bond yields and mortgage rates soaring. Nothaft said Bernanke indicated that "the Fed may moderate the pace of its buying later this year and end the purchases around the middle of 2014."

Even so, Nothaft said that while "higher mortgage rates may dampen some housing market activity ... the effect will be muted by the high level of buyer affordability, and home sales should remain strong."


Read/Post Comments (6) | Recommend This Article (4)

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  • Report this Comment On June 27, 2013, at 1:32 PM, MagellinDRK wrote:

    Dont believe the hype. The Banks are screaming these numbers to force you into buying now or locking in that rate. The 10 year bond yiel has dropped over the last couple of days and a long with it mortgage rates will follow. Do not listen to those who instill fear for their own greed!

  • Report this Comment On June 27, 2013, at 1:40 PM, Kummin wrote:

    I wish editors would be more responsible. Yes, interest rates are on the rise. I would hardly describe them as "soaring", however. It's a cheesy attention getter. For a second I thought the Fool had been acquired by Yahoo. They are the experts at cheesy headlines.

  • Report this Comment On June 27, 2013, at 3:05 PM, 790eld wrote:

    Mortgage rates go up and down

  • Report this Comment On June 27, 2013, at 5:10 PM, TMFDitty wrote:

    Are the rates historically high? No.

    But a 13.5% one-week increase in the cost of a 30-year fixed-rate mortgage does indeed qualify as "soaring" in my book.

    To put that in context, if rates continued to climb at this pace (note: they won't), new borrowers would wind up paying 27% for their mortgages a year from now. That's how fast the rates went up.

  • Report this Comment On June 27, 2013, at 6:30 PM, Crazylegs52 wrote:

    To put in perspective I am buying a house in San Diego and my doofus mortgage broker did not lock my rate as advertised 6/11/2013. We are 3 weeks into escrow and discover this and now are faced with losing $10,000 good faith deposit or a mortgage that is $200 per month higher than 2 weeks ago!

    Obviously this is a bad situation but an example of the enormity of the rate change.

    We will hopefully get a chance to refinance in 6-9 months.

    If not, ugh :(

  • Report this Comment On June 27, 2013, at 8:21 PM, ejhickey wrote:

    ice housing boom while it lasted

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